J.P. Morgan Case Highlights Conflicts for SEC’s White

Conflicts of interest have forced Securities and Exchange Commission Chairman Mary Jo White to recuse herself from some high-profile cases, including this week’s expected settlement with J.P. Morgan Chase & Co. for its handling of the “London whale” trading fiasco.

The case is an example of how Ms. White’s former go-to status as a lawyer for banks and securities firms is crimping her ability to participate in the day-to-day work of Wall Street’s top cop.

Ms. White, a former federal prosecutor, wasn’t able to participate in the J.P. Morgan case because the bank was her client at law firm Debevoise & Plimpton LLP before she joined the SEC in April.

As the head of the SEC, ethics rules bar Ms. White for two years from working on certain matters – including enforcement actions like the J.P. Morgan settlement – that directly affect Debevoise, her clients from the past two years or any of her husband’s clients that he is representing before the agency. Her husband John White is a non-equity partner at law firm Cravath Swaine & Moore LLP.

Disclosure forms signed by Ms. White earlier this year listed Deloitte & Touche LLP, Deutsche Telekom AG and former Bank of America Corp. chairman and CEO Ken Lewis as former clients who could also trigger recusals. The disclosure form doesn’t indicate when Ms. White’s work for these clients began and ended, so it’s not publicly known when she might be allowed to work on matters affecting them.

Ms. White’s prior legal work for General Electric Co. and Prudential Financial Inc. prevented her from participating this summer when a panel of regulators known as the Financial Stability Oversight Council considered whether those firms are systemically risky to warrant heightened federal oversight. The SEC Chairman is one of 10 voting members of FSOC.

SEC spokesman John Nester said the agency does not provide a full list of recusals because conditions giving rise to them can change. He disputed that recusals from any of the agency’s officials have slowed or impeded the SEC’s work.

“The Commission’s recusal policy protects investors because it prevents even the appearance of a potential conflict of interest in our deliberations. Like her predecessors, Chair White follows her ethics agreement and consults with the agency’s Chief Ethics Officer as appropriate when potential conflicts arise,” Mr. Nester said in an email.

Ms. White said during her confirmation hearings earlier this year she had been assured by the SEC’s ethics officer that she would be able to participate in votes on agency rules and that the scope of enforcement cases she would have to recuse herself from is “quite narrow.”